RAY DALIO: It would be 'terrible' if Gary Cohn left the White House

Billionaire Ray Dalio, the founder of $160 billion hedge-fund behemoth Bridgewater Associates, said it would be “terrible” if Gary Cohn, the director of the National Economic Council, left the Trump White House. He specifically said that it would be “bad” for the market.

“In terms of my reaction, I would say if he was to leave, it would be terrible because it would undermine the future progress of economic reforms,” Dalio said at the CNBC Institutional Investor Delivering Alpha Conference.

He added that it would only further challenge the administration, which still has vacant jobs.

“I think it becomes also representative of what it’s like to be in the administration,” Dalio said. “I would be concerned about the leadership. I think it would be terrible if Gary left.”

Cohn has been seen as a contender for the next chairman of the Federal Reserve. Dalio described Cohn as a “very capable man.”

Tepid growth and “watered down” tax reform

Earlier during the discussion, Dalio said that he thinks that the U.S. is in a 2.5 to 3% growth environment.

“The real question is whether you can unleash the productivity by some changes a pro business environment can produce,” Dalio said.

He noted that the problems of conflicts have slowed that down.

“If we look at the reasons, we have never had still so many obligations that are to be paid. It’s not just a matter of debt. It’s a matter of pensions. It’s a matter of health care. Those kinds of obligations,” Dalio said, adding that he thinks that means “there are going to be drains on productivity.”

He characterized the U.S. as a “highly burdened economy.”

When asked about tax reform, Dalio thinks that there will be a “watered down version” of what was anticipated to happen. He also thinks it will probably come later.

On the economy, he compared this current period to the late 1930s, specifically 1937. During that time, interest rates hit zero and government printed lots of money. This exacerbated the wealth gap, which in turn led to social unrest.

“There’s a lot of tension. That kind of environment creates populism,” Dalio said. “That populism means the electing of people who are strong characters.”

Right now, we’re in an environment of a lot of conflict, within the administration, between parties, and other countries and so on, he noted.

“I think the real question is how we deal with each other. In other words, do the principals that bind us together are they stronger than the ones that divide us?” Dalio said.

As an investor, he noted that gold is an “effective diversifier.” He reiterated that it should be 5 to 10% of a portfolio.